Consultation on fire and rehire

Firing and rehiring or  dismissal and re-engagement (as it’s technically called), is something employers can do if they need to employees to sign new contracts, but some employees refuse.

The employer needs to show a good business reason for the dismissal (and offer of re-engagement under the new contract terms) and go through a fair consultation before dismissing. If it does both those things, the dismissal will be fair, rather than unfair, and the dismissed employee won’t have any legal claims they can bring.

This entirely lawful practice comes in for criticism from unions and the press from time to time. This was seen when British Gas dismissed hundreds of its engineers in 2021 and offered them new contracts with new terms and conditions. It was also in the press more recently when P&O Ferries dismissed 800 employees and tried to replace them with lower paid agency workers.

The government is introducing a new Code of Practice, which will apply to all employers thinking about going down the ‘fire and rehire’ route, irrespective of how many employees are affected. It includes very detailed consultation processes with a longer timeframe that the law currently requires.  Failure to follow the code can result in a dismissal being unfair, and a 25% uplift to compensation.

The Code is likely to come into force this year, although we do not have details of the date yet.